New era for Collective Management in Greece and the legal uncertainty for AEPI, the major Greek CMO

The Collective Management Organisations in Greece are subject to the legal framework of the Law 2121/1993, as amended recently by Law 4481/2017 regarding the collective management of copyright and related rights, thereby the Greek legislation was harmonised with the Directive 2014/26/EU.

In this article we aim to focus on one aspect of the new statute and, particularly, to clarify the types of entities that can collectively manage copyright and related rights, to illustrate their main differences, concerning both their operation mode as well as the management rights attributed to them, and to highlight one of the new law’s basic purposes, the reinforcement of their transparency and accountability, taking into consideration the management problems that, the Hellenic Society for the Protection of Intellectual Property (AEPI SA), the biggest CMO in Greece, dealt and deals with.

AEPI and management problems

AEPI SA operates in Greece as a CMO for copyright by virtue of the licence No 9485/1997 of the Ministry of Culture, with a view to the protection of copyright on works that have been composed or/and written in the past or/and will be composed in the future by the contracting with AEPI creators/rightholders of musical works. It dates, as a matter of fact, back to approximately 1930. According to AEPI’s own figures, it represents, at present, more than 14,760 Greek and foreign (through direct membership agreements) creators/intellectual property owners as well as 2.200.000 foreign creators through representation agreements with corresponding Collective Management Organisations worldwide.

In view of the publication of the new Law on the collective management of copyright and related rights, with the draft law of which in its primary form AEPI did not agree, on March 2016, it was resolved unanimously by the AEPI’s extraordinary general assembly of members that the company will seize to be of Greek nationality. Moreover, the acquisition of Cypriot nationality, the change of the company’s type from Societe Anonyme to limited company and the transfer of its headquarters from Greece to Cyprus were decided.

The above, as well as the new articles of association of AEPI, were registered in Athens’ Registry of Companies. Since then it seized to be a legal person in Greece and the company was registered in Cyprus’ Register of Companies.

Thereafter, AEPI “changed its mind” and for its own reasons and interests revoked the extraordinary GA resolution. The question, however, of how a no more existing legal person can revoke its resolution remains to be answered.

Despite these corporate issues, AEPI continued to be in the Ministry of Culture and Financial Police’s firing line for managerial mistakes. In fact, following creators’ complaints expressing concerns about the collection and distribution of their rights, a Commissioner in April 2017 and a Supervisory Board according to article 10 of the new Law 4481/2017 were appointed by the Ministry of Culture.

III. Collective Management in accordance with the new Law 4481/2017

The new Law 4481/2017 aims mainly to regulate the operation of Collective Management Organisations (hereinafter CMOs) for copyright and related rights and of Independent Management Entities (hereinafter IMEs).

CMO is an organisation which has as a sole or main purpose the management of copyright or rights related to copyright on behalf of rightholders and which fulfills at least one of the following criteria: a) it is owned or controlled by its members, b) it is organised on a not-for-profit basis.

IME is an organisation which has as a sole or main purpose the management of copyright or rights related to copyright on behalf of rightholders and which fulfills cumulatively the following criteria: a) it is neither owned nor controlled, directly or indirectly, wholly or in part, by rightholders; and (b) it is organised on a for-profit basis. We underline the fact that the Law provides for two types of IMEs, the so-called “simple” and the “IMEs with a dominant position in the Greek market”, type which was introduced in the Law with a special view to deal with the AEPI, which would have not been able to operate as a CMO as it is a profit-seeking company (we note that according to the initial draft of the Law a CMO should be organised on a not-for-profit basis). This restriction, however, has not been included in the finally voted Law text resulting in the possibility for a profit-seeking company, such as AEPI, to be a CMO, as long as “it is controlled by its members”.

In fact, IMEs with a dominant position are treated by law as CMOs and may manage rights which are subject to mandatory collective management, such as cable broadcasting of radio and television programmes and the collection, due to the use of equipment for broadcasting or presentation to the public, of the article’s 49 of Law 2121/1993 equitable remuneration for performers and performing artists, a possibility that is not offered to “simple” IMEs.

For the establishment and operation of CMOs and IMEs with a dominant position a Ministry of Culture and Sports licence is required, according to the detailed procedure laid down by Law 4481/2017. By contrast, for “simple” IMEs the issuance of a declaratory act by the Ministry of Culture is sufficient. On the contrary, for CMOs and IMEs established in other EU member states the mere acknowledgement to OPI (Hellenic Copyright Organization) of the intention to develop activity in Greece and of the documents proving their legal operation in their home member state is enough.

In addition, we note that CMOs as well as IMEs with a dominant position are obliged to include in their articles of association a General Meeting and Supervisory Board provision.

Duty of transparency and control

A main concern of the new Law was the strengthening of formalities which serve the transparency and guarantee the protection of creators and rightholders’ rights as well as the continued existence of CMOs and IMEs.

Thus, CMOs and IMEs are now obliged to make public information -among others – about their operation, their policy, their basic tariffs, the way they distribute amounts to rightholders and they shall, irrespective of their legal form under national law, draw up an annual transparency report to enable control by the public, the rightholders and the users.

The indispensable sustainability of CMOs and IMEs with a dominant position in general, as well as of AEPI, is ensured by a specific provision according to which, in case of serious financial problems, an independent Commissioner of Reorganisation will be appointed. The Commissioner contributes to the reorganisation of the CMO or IME solely for the purposes of ensuring the continuance of their operation and the protection of the creators, the rightholders and their rights.

Conclusion

The new Law is the result of numerous compromises. This is the reason why there is still no answer to the question of whether AEPI today fulfils the requirements to be a CMO or whether it is an IME with a dominant position, a legal entity which was created initially to characterise AEPI, due to the fact that it did not fulfil the CMO requirements under the initial form of the draft law, and to give AEPI the same privileges as enjoyed by CMOs. This issue will be settled by OPI and the Ministry of Culture that will decide whether AEPI is actually controlled by its members so that it can be characterised as CMO or if it is an IME with a dominant position in the Greek market. Still unclear are, however, the criteria on the basis of which the Ministry of Culture, upon OPI’s recommendation, will determine whether an IME has a dominant position or not, given that the law does not give specific guidelines.

The existence of tailor-made laws in Greece is not a rare phenomenon. Nonetheless, despite the new law’s defects and the existence of many ambiguities, we cannot overlook that, among its advantages, are provisions that aim to CMOs’ transparency and sustainability, as well as provisions that, for the first time in Greek legislation, strengthen the protection of copyright and related rights that are infringed through the Internet.

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About the ILN IP Specialty Group

Headed by Eddie Powell of Fladgate LLP, London, and Norman Zivin of Cooper & Dunham LLP, New York, New York, the ILN's Intellectual Property Group provides the platform for enhanced communication, enabling all of its members to easily service the needs of their clients requiring advice on cross-border transactions. Members of the group meet regularly at ILN conferences and industry events, and have collaborated on discussions and publications of mutual interest.